Should apartment managers be licensed?
By Dan Margulies

Should apartment managers be licensed?
By Dan Margulies
Executive Director, Associated Builders and Owners of Greater New York, Inc. and National Associated Builders and Owners Inc.

In some 41 states, you need to be a licensed real estate broker to handle leasing or to collect rent for a third party. But, the classes you have to take to be licensed have almost no information about apartment management. They mostly deal with home sales, and sometimes leasing. They don’t tend to have any lessons on budgets, purchasing supplies, managing staff, maintenance, etc.

Only four states and the District of Columbia have property management licensing or certification requirements. Another five states just require property management training to manage community associations.

And, of course, most states make exceptions for owner/managers managing their own property and their employees.

Associations like National Associated Builders and Owners, the Institute for Real Estate Management, the National Apartment Association, and the Community Associations Institute all offer nationally recognized voluntary certification programs for apartment managers. Based on the curricula, any of these certification programs should be more important to owners and shareholders choosing a manager than state requirements.

Why do states license barbers and Athlete Agents (yes, you, Jerry Maguire), but not managing agents responsible for millions in assets and the safety of people’s homes? One reason is the number of units managed by building owners. As mentioned above, owner/managers often aren’t even required to be licensed brokers because it seems silly to require someone to get a license to manage their own property. After all, who would be a more careful property steward than the owner? Looked at another way, however, owning a car doesn’t exempt you from needing a driver’s license.

Regardless, there are certain things everyone would want an agent to know. NABO’s Registered in Apartment Management curriculum includes sections on preparing an operations manual for each property; resident relations; community relations; leasing, setting rent levels; cash management; risk management; preventive and emergency maintenance; contracting; marketing; tenant screening; construction management; fair housing requirements; and much more. Property management is actually a pretty interesting job because it has so many facets. It’s not something to take on without training.

Building owners and residents want agents who care enough to get this kind of training and certification. To use the drivers license analogy again, there are a lot of bad drivers with licenses out there. Insurance companies give discounts to people who take extra safety courses for a reason. They work. Similarly, the agent who takes certification classes and continuing education is more likely to do a good job.

Just think for a minute about our recent experience with Hurricane Sandy. How might a professional managing agent have been prepared?

He/she would have had an emergency plan in place beforehand, including contact information for all residents; emergency contractors; and suppliers. Faced with the loss of electricity and flooded boiler rooms, they might have already identified resources for pumps, generators, or auxiliary heating.

Perhaps more importantly, long term, they would have a handle on the building budget to know how much money was available for different responses; and an understanding of the building’s insurance coverage and limits. They would also be wise to understand the legal issues raised by lost services for both renter and owner residents.

Another legal area where professionalism is vital involves fair housing and handicapped access laws. Discrimination is wrong, but illegal discrimination can also be very expensive. Not only is a manager responsible to understand and comply with anti-discrimination laws, he or she often has to explain their responsibilities to owners and boards.

One more example of the need for specialized training is purchasing. Do you really want someone without a broad understanding of heating systems as point person on the purchase and installation of a $100,000 or more boiler? Do you care about the credentials of someone organizing a million dollar façade restoration? Or how about just the responsibility for managing several million in rent or maintenance payments annually? Shouldn’t that require some knowledge of bookkeeping?

RAM certification is one of several national and regional credentials you can look for in a managing agent. Not looking for an agent with specialized training is just a mistake.